Avoiding the Most Common Refinancing Blunders
Due to a consistently weak economy and falling home values, mortgage rates are at an all-time low.
For those who are considering refinancing, now is the time to do it, before the rate rebounds.
However, it is important not to rush the process and make mistakes.
These are just a few of the common errors made by those attempting to refinance their homes.
By avoiding these errors, you can feel more confident in the likelihood of a smooth, successful refinancing process.
1.
Hesitating.
The number one mistake made by most homeowners who are considering refinancing is that they hesitate.
While borrowers are waiting for mortgage rates to drop still further, they end up waiting so long that rates rebound, and they miss out on the current refinancing opportunity.
2.
Over-Value Property.
Even as property values continue to fall, many homeowners will still over-estimate the value of their home when looking to refinance.
As a result, loan rates will be higher than necessary.
To avoid incorrect valuations, consult with an appraiser.
Have an expert come and appraise your property in its entirety, to give you an accurate view of how much the home is worth.
3.
Ignoring Short-Term Loans.
A surprising number of borrowers neglect to consider the possibility of a short-term loan when they are entering into refinancing discussions.
The common 30-year mortgages are not the only option available; sometimes, a 20-year or 15-year mortgage can be more beneficial as they will decrease the overall life span of the loan, thereby reducing the total amount of interest that will be paid.
4.
Forgetting Additional Factors.
While interest rates are important, there are a variety of other factors that also need to be considered when looking to refinance.
Quite frequently, borrowers will forget to consider the impact of lender fees and loan terms on their decision to refinance.
The reputation of the lender also ought to be factored into the equation.
Before actively pursuing refinancing, it is important to compare all of the options available.
Evaluate the options including all of the additional fees and relevant factors accounted for to determine which plan is best for you, or if refinancing is even the best option.
5.
Being Unprepared.
Principally, this means lacking the documentation necessary to refinance.
As part of their research, borrowers should always investigate what documents will be required, and begin the process of collecting the necessary information.
Many borrowers are not aware that banks and other mortgage providers require significantly more documentation to refinance today than they did in years past.
Borrowers ought to be prepared to present a wide array of financial documents, including recent pay stubs, bank statements, W-2 Forms, and tax returns.
For those who are considering refinancing, now is the time to do it, before the rate rebounds.
However, it is important not to rush the process and make mistakes.
These are just a few of the common errors made by those attempting to refinance their homes.
By avoiding these errors, you can feel more confident in the likelihood of a smooth, successful refinancing process.
1.
Hesitating.
The number one mistake made by most homeowners who are considering refinancing is that they hesitate.
While borrowers are waiting for mortgage rates to drop still further, they end up waiting so long that rates rebound, and they miss out on the current refinancing opportunity.
2.
Over-Value Property.
Even as property values continue to fall, many homeowners will still over-estimate the value of their home when looking to refinance.
As a result, loan rates will be higher than necessary.
To avoid incorrect valuations, consult with an appraiser.
Have an expert come and appraise your property in its entirety, to give you an accurate view of how much the home is worth.
3.
Ignoring Short-Term Loans.
A surprising number of borrowers neglect to consider the possibility of a short-term loan when they are entering into refinancing discussions.
The common 30-year mortgages are not the only option available; sometimes, a 20-year or 15-year mortgage can be more beneficial as they will decrease the overall life span of the loan, thereby reducing the total amount of interest that will be paid.
4.
Forgetting Additional Factors.
While interest rates are important, there are a variety of other factors that also need to be considered when looking to refinance.
Quite frequently, borrowers will forget to consider the impact of lender fees and loan terms on their decision to refinance.
The reputation of the lender also ought to be factored into the equation.
Before actively pursuing refinancing, it is important to compare all of the options available.
Evaluate the options including all of the additional fees and relevant factors accounted for to determine which plan is best for you, or if refinancing is even the best option.
5.
Being Unprepared.
Principally, this means lacking the documentation necessary to refinance.
As part of their research, borrowers should always investigate what documents will be required, and begin the process of collecting the necessary information.
Many borrowers are not aware that banks and other mortgage providers require significantly more documentation to refinance today than they did in years past.
Borrowers ought to be prepared to present a wide array of financial documents, including recent pay stubs, bank statements, W-2 Forms, and tax returns.
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